Also annoying to basically admit that layoffs were basically avoidable given the “strong cash position” but made anyway to give the company a little more runway. Doesn’t look too great.
It looks like the company's biggest creator brings roughly $5k a month for Patreon and only one other creator has their financials public and brings in even 40% of that [1]. There is certainly money to be made in that business, but I just don't see how they scale revenue in any large way without pissing off either patrons or creators.
Assuming this is a representative distribution of the top 1000 (and I bet it's actually higher!):
- $10k/month * 300 + $5k/month * 300 + $3k/month * 400
- ~$285k/month for Patron just from the official cut
On top of this, Patreon probably has revenue sharing with the card processors for a small percentage of the fees (let's say even 0.1%), which adds a couple k.
Now people in the high-paying pro plans that get you the 5% rate (the lower end is 12% platform fees!) will pay $300/month.
that alone doubles their revenue, adding $300k/month _for just these first thousand patrons_.
So you're already at $600k/month in MRR. Hell of a lot more than a lot of "serious venture scale" B2B CRMs that are trying to be the next Salesforce or whatever but utterly failing at providing the value add needed to make big billings.
You might not need 300 people for it. And yeah it would be a lot better to make a lot of money. But they're being pretty successful at getting money here. And this is just assuming that they only have 1000 patrons (which is just false)
Even then that doesn’t exactly cover salary and benefits for 300 employees in SF, let alone everything else.
Health insurance is expensive. Don’t think many realize how much it costs employers.
Then obviously rent is the other big expense. And cloud computing.
Patreon’s fees range from 5-12% so they could easily be making more make more money from the 10,000 to 100,000 creators than they do the top 10,000. Further, people can hide earnings which makes estimates of their finances difficult.
Also, they have three different fees. The 5% to 12% fees are on top of the CC fees and money transfer fees. https://support.patreon.com/hc/en-us/articles/360027674431
Ex: Someone with 500 subscribers at 3$ per month after CC fees on the middle 8% tier is 120$ per month to Patreon.
Personally, I've been using them to support creators for more than 5 years now, so I really believe in the model. But neither the software nor the UX has ever been great, and I'm amazed they've needed $165 million to get this far. If the people I'm supporting moved elsewhere, I'd quickly follow them and not look back. So I suspect they're going to have a very hard time giving their investors any major return.